It’s fair to say that the UK has endured a bumpy ride in the two and a half years since the EU referendum. The immediate effects of the vote on 23 June 2016 were obvious; the sterling took a dive overnight, while people waited with bated breath to see how the aftermath would pan out.
But since that fateful day, the doom and gloom predictions have largely proven unfounded—or else largely exaggerated—and the UK continues to be an attractive destination for students, businesses, professionals and investors.
With Brexit dominating the headlines for the past 30 months, however, many other issues were moved down the long list of national priorities; including housing. And while many indicators suggest that the UK property market is demonstrating great resilience in the face of the current political and economic uncertainty (recent data reveals that the number of property sale completions grew112% year-on-year in January 2019), we can’t let Brexit overshadow the challenges currently facing the sector.
After all, the government must continue to push for much-needed reforms to ensure more people can access and benefit from the property market.
What are the current challenges facing the property market?
Without a doubt, one of the biggest obstacles hindering the property market is the undersupply of housing. Admittedly, this issue has long been on the government’s radar. Last year, Prime Minister Theresa May pledged to build 300,000 new homes every year by the mid-2020s in order to solve the imbalance.
As it stands, these targets appear overly ambitious—less than half of house builders surveyed recently are confident that this goal is achievable. This is despite increasing the rate at which they have built homes over the last year. Evidently, we are in desperate need of more creative solutions to make housing more accessible.
Paresh Raja, CEO, Market Financial Solutions
There is also the added issue of affordability. Average house prices are2.9% higher now than in January 2018—and while this underlines the attractiveness of UK real estate—it also means that many people are being priced out of the property market.
Meanwhile, for those gearing up to purchase a property in the coming months, the high rate of property chain collapses presents an obstacle. Half (49.8%) of all transactions in England and Wales fell through before completion in the final quarter of 2018; one of the most common reasons for this was ‘gazumping’, when sellers accept a higher offer from another buyer after a sale is already agreed.
How can we overcome these challenges?
Clearly, there is a lot of work to be done to ensure more people can engage with the housing market. For one, we must advocate creative new ways to put more homes on the market—without simply relying on the construction of new-builds alone to solve the housing crisis.
One promising solution is to cast an eye towards the thousands of properties that currently stand empty across the UK. It is thought that more than 200,000 homes are unoccupied, with more than 11,000 having been left untouched for more than ten years. Hiding stores of untapped potential, it might just take some incentives to encourage people to refurbish these derelict properties and put them back onto the market.
Moreover, the public is eager for such solutions. Last year, Market Financial Solutions conducted a nationally representative survey to uncover what housing reforms Britons would like the government to introduce. A significant number (44%) believe that financial incentives should be on offer for those seeking to renovate derelict properties in order to then rent or sell them.
At the same time, MFS uncovered clear demand for the introduction of new laws to prevent gazumping. More than half of households (55%) want to see this action banned, with the number rising for those who own a home—just under a two thirds (64%) are keen for stronger government action to reduce the risk of a property chain collapsing.
Looking ahead
Given the current political climate, it is difficult to predict what changes the government might make in the coming months to instil greater confidence into the housing market.
For the time being, Brexit clearly remains a priority—but we also shouldn’t ignore the challenges people are facing daily when it comes to getting on, and moving up, the property ladder. As the uncertainty fades and the UK’s future post-Brexit becomes clearer, I urge the government to make housing a priority once more.